The release of a Preliminary Issues paper is a standard step early in the market study process, providing an overview of the sector and setting out the context and proposed focus areas for the study. 

Commerce Commission Chair Dr John Small says that the study is centred on the areas that will be most relevant to most people, which is why deposit accounts and home loans are proposed as key focus areas.  Other personal banking services, like insurance, may be considered to the extent they are tied to or bundled together with deposit accounts and home loans.

“Deposit accounts and home loans are an important aspect of how banks compete for retail customers and are held by a large proportion of Kiwis. We will also consider other banking products to build a complete picture of competition between personal banking service providers.”

Dr Small says the Preliminary Issues Paper also includes a review of performance indicators for New Zealand banks. This draws on existing research and sets out how profits and other metrics compare with banks overseas.

“Our initial review of existing research shows that our banks are more profitable than in comparable economies over the past decade, and this raises questions for us. We want to understand whether lack of competition in personal banking is a contributing factor. This is important in the context of our study as profitability can serve as an indicator of the intensity of competition.”

“As we’ve previously set out, the study is looking at how the competitive process is working. If competition is working well in the sector, we’ll see the benefit to Kiwis consumers through the quality and range of products available, fees, interest and charges and the services offered,” says Dr Small.

Focus areas of market study


The Preliminary Issues paper proposes a primary focus on deposit accounts and home loans and presents a range of issues that might be explored, including:

  • The nature of competition in the sector;
  • Whether all Kiwis are well served by the sector;
  • The ease of entry and expansion and the impact of legislative and regulatory frameworks;
  • How easy it is for Kiwis to swap providers and the degree to which the tying and bundling of services may limit switching;
  • How innovative the sector is, particularly in comparison to overseas markets, and whether there are barriers to innovation here;
  • Whether bank profits are consistently high and if so, whether the intensity of competition be ruled out as a contributing factor.

Kiwi consumers, those involved in the sector and other interested parties are now invited to have their say. Dr Small says that the feedback provided in the submission process will help to shape the focus areas for the study.  “We know how important this sector is to New Zealanders and the 14-month timeframe is necessary to deliver a robust study and includes the time we need for public consultation like this.

“There’s been significant interest in this market study, and our thinking and conclusions will be guided by the feedback and evidence we receive over the coming weeks. 

“We need to hear from the sector – the major banks and the small banks, as well as non-bank participants. We also know there are different experiences of personal banking services across communities and demographics and it’s important that we hear from customers about those.”

Commerce and Consumer Minister Duncan Webb and Finance Minister Grant Robertson announced the market study into personal banking services on 20 June and Dr Small said work is underway. “Our market studies team includes skilled economists, lawyers, investigators, and analysts and they’ve well and truly hit the ground running.”

Next steps

The Commission is now inviting feedback to the paper via its website, with submissions closing at 4pm on 7 September 2023.

As detailed in the process paper, the Commission will publish a draft report in March 2024 for consultation, with the final report – including any recommendations – published by the end of August 2024.